Updated: Sep 22, 2022
Watch for NEW webinar series announced at the end of this blog.
#1 Finances and debt
We’ve reached the number 7 Trap: It’s a Trap Pt 7 - Finances and Debt. That's a really hot topic these days. Let’s face it. If you always seem to find yourself with more month at the end of the money, debt is poverty that becomes a prison sentence hard to escape. It’s obvious that far too many people trap themselves in lifestyles that they no longer want, need, or can afford. This has been happening for a long time for a lot of people. Debt traps us in unfulfilling jobs, hour-after-hour doing things that often suck the life out of us. Uncontrolled spending enslaves us to a life of mediocrity, routine, and quiet desperation. It's a Trap Pt 5 - Work, gives you some insight into this and the response, The Great Resignation.
Going into 2020 the average debt looked something like this, according to CNBC.
“While the average American has $90,460 in debt, this includes all types of consumer debt products, from credit cards to personal loans, mortgages, and student debt.
In our efforts to keep up with the Joneses (or just get by during this period of economic uncertainty), debt has become a normalized part of the American lifestyle.
Borrowing money is often an important part of a long-term financial plan, whether it’s to access education and career opportunities, buy a car for your commute or find a place to call home. However, debt also involves a little risk and can be expensive. Not only do you pay interest and fees, borrowing of any kind requires you to make your payments on time in order to keep your account and credit score in good standing.”
The Pandemic Impact on Finances and Debt
The less your income, the easier it is to pile up debt. That obvious lesson hit home in 2020.
The unemployment rate went from 3.5% pre-COVID to a peak of 14.8% in April 2020—the highest level since 1948.
The total U.S. consumer debt balance grew $800 billion, according to Experian. That was an increase of 6% over 2019, the highest annual growth jump in over a decade.
It’s been kind of like a double whammy. Trapped in debt, and worsened by the pandemic. Now with an inflated economy, the financial knot is tightening even more.
According to Market Watch, surging gasoline prices last month drove the rate of U.S. inflation to a nearly 41-year peak of 9.1%, offering little hope of help soon for Americans suffering from a high cost of living.
The increase in consumer prices in June pushed the rate of inflation over the past year to 9.1% from 8.6%. The last time inflation was so high was in November 1981. [Source: https://www.marketwatch.com/story/coming-up-consumer-price-index-for-june-11657713665#:~:text=The%20increase%20in%20consumer%20prices,to%209.1%25%20from%208.6%25.]
Financial Debt and Mental Health
When you consider the mental health implications, it becomes even harder to escape the trap of financial debt as it touches just about every area of our life.
Creates additional stress
Stress, especially chronic stress that becomes part of your life for years, has a deeply powerful effect on your mind and body. Stress puts more wear and tear on your cardiovascular system. Constant stress makes it easier to develop mental health problems and can affect the parts of your brain associated with Alzheimer's disease.
Risk factors for mental illnesses
People in debt are three times more likely to take their lives than those who are not experiencing financial issues. Long-term financial insecurity and consistent poverty, as well as the pressure from lenders and debt collectors to pay bills, can trigger suicidal thoughts and actions.
Developing physical health issues
Debt can lead to anxiety and depression, which can increase headaches, affect sleeping patterns, and impact a person's ability to focus. This type of physical stress on the body can result in more frequent colds and infections and affect a person's ability to go to work which further enhances financial struggles.
Affects families and communities
Families suffering from debt, whether it be personal debt or student loan debt, are unable to put as much money into retirement as they would like and experience a delay in traditional milestones like starting a family and buying a home.
Developing behavioral symptoms
Financial stress can lead to an adverse change in behavioral symptoms such as changes in appetite, procrastination, and nervous behaviors.
Increases poor spending habits
When someone is experiencing mental health issues, they may resort to overspending to relieve feelings of depression and anxiety temporarily. Compulsive overspending can lead to guilt, depression, overspending and ultimately more debt.
Increases usage of drugs and alcohol
Someone who is experiencing stress from financial debt may turn to antidepressants or alcohol to help deal with their anxiety. This can lead to addiction and even increased debt due to the costs associated with substance abuse.
[Source: Sara East https://www.moneygeek.com/debt/resources/how-debt-can-harm-your-health/#:~:text=Debt%20can%20lead%20to%20anxiety,which%20further%20enhances%20financial%20struggles.]
What can you do? Here’s what some of the experts are saying.
Make one financial decision at a time. ...
Track your spending. ...
Identify your financial stressors and make a plan. ...
Recognize how you deal with stress related to money. ...
Avoid temptation. ...
Remember what's important. ...
Ask for support. [Source: https://www.apa.org/topics/stress/holiday-money]
Another source recommends:
Create extra sources of income.
Declutter your budget.
Don't forget general stress management. You can reduce stress by practicing stress-reducing techniques.
Eating a nutritious diet.
Getting enough sleep.
Doing some form of physical exercise.
Try mindfulness techniques like deep breathing and yoga to ease any anxiety.
Understand the debt cycle. Understanding debt is the first step to getting yourself out of it. Do your research and pay attention to interest rates. It's advisable to first pay off the debt that has the largest interest rate to avoid paying higher costs over time.
Take stock of your finances.
Reach out for support.
Engage in self-care.
This concludes the series on the 7 traps. Now that you know the traps, or perhaps confirm what you've been feeling, I hope the information and tips in each of the 7 traps were useful.
~ ~ ~ ~ ~ ~ ~ FREE WEBINAR
To learn about these traps is one thing. To recognize when you're trapped and to navigate your escape is quite another.
I will show you a way to recognize how fear maintains your captivity and present the first phase of a 7 Step Formula (7SF) showing how you can navigate your way to freedom – away from your fear(s).
Visit my website for more information about this new 7Step Formula (7SF), request email notifications about the date and how to register.
You can also learn more about my 7 Step Formula (7SF) by picking up a copy of my book, Escape from Insanity, Illusions and Lies.